1 insider trading | Definition of insider trading

insider trading

noun

Definition of insider trading

: the illegal use of information available only to insiders in order to make a profit in financial trading

Examples of insider trading in a Sentence

Recent Examples on the Web

To avoid tripping insider trading rules or spooking shareholders, some executives schedule periodic stock sales. — Matt Egan, CNN, "Insiders are selling stock as recession worries mount," 26 Aug. 2019 There were also allegations of insider trading against him. — Pramod Mathew, Quartz India, "Tributes pour in as the body of a missing Indian coffee baron is found on the banks of a river," 31 July 2019 As early as 1792, during Washington’s presidency, former Assistant Treasury Secretary William Duer bilked the Treasury of $250,000 and, through insider trading, caused a financial panic. — James M. Banner Jr., Time, "Corruption, Cover-Ups and the Shocking Presidential History to Remember as Robert Mueller Testifies," 22 July 2019 The Security and Exchanges Commission charged Ying with insider trading last year. — Andrew Liptak, The Verge, "Former Equifax executive sentenced to prison for insider trading prior to data breach," 29 June 2019 The revelation came during a continuing insider trading trial Monday when prosecutors made a special disclosure to the jury about intelligence that came to light in the past few weeks. — Bradley Hope, WSJ, "U.K. Investigates Allegation Citigroup Employee Leaked Deal Information," 3 June 2019 This was after Congress cracked down in 2012 on insider trading among members and required more disclosure of stock-trading activity, as Public Citizen lobbyist Craig Holman described in an Washington Post op-ed. — Kristen Mcqueary, chicagotribune.com, "Column: There’s only one way to clean up government in Illinois and City Hall," 3 June 2019 In recent weeks, the first and second members of Congress to endorse Trump have been indicted, one for insider trading that seems to have taken place from a cellphone on the White House lawn. — Mark Schmitt, Vox, "Stop saying “drain the swamp”," 7 Sep. 2018 DeCinces, a former third baseman for the California Angels and Baltimore Orioles who lives in Newport Beach, was convicted in 2017 of insider trading for a stock buy that earned him more than $1 million. — Daily Pilot, "Former Angels player Doug DeCinces gets home detention in insider trading case," 13 Aug. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'insider trading.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of insider trading

1966, in the meaning defined above

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More Definitions for insider trading

insider trading

noun

Financial Definition of insider trading

What It Is

Insider trading refers to the trading of securities by corporate insiders such as managers or executives.

How It Works

Insider trading can be legal or illegal depending on if the information used to base the trade is public.

Individuals who engage in illegal insider trading attempt to benefit from trades based on information about a company not yet made public. For example, an executive of Company XYZ who purchases shares of the company based on a pending merger announcement is engaging in illegal insider trading.

However, once Company XYZ has announced the merger publicly, insiders may legally trade the shares based on the information.

Insider transactions must be reported to the Securities and Exchange Commission (SEC) via Form 4.

Why It Matters

Some investors follow legal insider trading because they believe insiders have a better insight to the financial health of a company.

For example, a CEO buying shares of his company conveys confidence in the future of the business.

Meanwhile, illegal insider trading can lead to fine and even imprisonment for the guilty party.

Source: Investing Answers

insider trading

noun

English Language Learners Definition of insider trading

finance : the illegal activity of buying and selling a company's stocks while using secret information from a person who works for the company

insider trading

noun

Legal Definition of insider trading

: the illegal use of especially material inside information for profit in financial trading — see also tippee

More from Merriam-Webster on insider trading

Britannica.com: Encyclopedia article about insider trading